Eureka!

This could be big for UW-Madison. It’s exactly the sort of transformative discovery you would expect from a great research university. Like Harry Steenbock fortifying the vitamin D content of milk. Like James Thomson unlocking the mystery and promise of stem cells. In this case, two UW researchers have pioneered a breakthrough that could end the flood of human antibiotics into animal feed.

This is a huge issue for the food industry and for public health. U.S. health officials blame the overuse of antibiotics in human and animal care for the spread of dangerous drug-resistant pathogens that infect two million people a year and kill at least 23,000.

Hard to believe, but a stunning 80% of the antibiotics used in the U.S. isn’t for curing human disease, but prophylactically for preventing diseases in ostensibly healthy chickens, cattle and hogs raised for the American plate.

Enter Mark Cook and Jordan Sand. Cook, 59, is a celebrated UW-Madison professor of animal sciences. Sand, 32, is a UW-Madison animal research scientist with a doctorate in molecular and environmental toxicology. Their team has figured out a technique used by nature that activates an animal’s compromised immune system to repel common barnyard diseases like coccidiosis (diarrhea) in chickens and bovine respiratory disease in steers. Genetic engineering and antibiotics aren’t involved. But unleashing the animal’s inherent disease-fighting antibodies is.

With the university’s help and encouragement, the duo has formed a company — AB E Discovery — to commercialize their research. “Timing is everything. The market is ready,” says Sand, citing the public commitment of fast-food giants McDonald’s, Panera, Chipotle and others to eliminate or greatly reduce antibiotic-laced ingredients in their menus.

UW alum Chris Salm, whose Denmark, Wis., company pioneered ready-to-eat wholly cooked sausages and hotdogs, has joined the duo as the company CEO. Salm brings connections to the executive suites of the food industry. He calls the public’s preference for antibiotic-free meat “hugely significant” for farming.

MICHAEL I. KIENIT

“We have done very little in taking university innovations with commercial relevance and turning them into enterprises.”
— Mark Cook, UW animal sciences professor

Describing what he believes is a transformative technology for farmers to produce antibiotic-free beef, chicken and other animal meat, Cook says: “This is a game-changer.”

A game-changer is what UW-Madison sorely needs. Historically one of the nation’s leading research schools, the campus secures more than $1 billion a year in research grants. Yet between 2009 and 2014, Wisconsin ranked 42nd among the states in patents issued, according to federal data. And we were dead last in a survey of entrepreneurial activity taken by the Ewing Marion Kauffman Foundation.

Reality is that despite Dane County’s tech-led boom, the Wisconsin economy is in parlous condition. The state suffered the largest percentage decline of middle-class households in the nation between 2000 and 2013, according to a Pew Charitable Trusts study. Median Wisconsin household income in this period dropped from $60,344 to $51,467 in inflation-adjusted dollars.

Obvious questions follow: Why isn’t all this UW research igniting a wave of business and tech startups across the state? Why hasn’t the UW dynamo reversed the state’s economic decline?

UW-Madison, it’s fair to say, is feeling the heat.

The hostility of the ruling Republicans at the Capitol is as plain to see as the UW System’s $250 million budget cut and Gov. Scott Walker’s initial plan to gut the Wisconsin Idea, the university’s once sacrosanct pledge that its “beneficent influence” would extend statewide.

But that notion of “the boundaries of campus are the boundaries of the state” draws a sharp retort from skeptics who think UW-Madison’s reach seems to abruptly end at the Dane County line. Local folks may be proud that Dane County claims 73% of the new jobs created in Wisconsin over the last 10 years, but outstate observers see this as evidence of how UW-Madison beneficence is highly parochial.

Tom Hefty, the retired head of the old Blue Cross-Blue Shield United of Wisconsin, is a persistent critic, seeing an abject failure of the university to lead the state on economic growth. “UW-Madison has it backwards,” he says. “It tries to educate business on the advantages of the UW, while ignoring the real problem — educating faculty on how to work with business. That starts with hiring pro-growth entrepreneurial faculty.”

These expectations aren’t exclusive to UW-Madison. Walter Valdivia, in a Brookings Institution study about technology transfer, says political pressure is mounting on all universities to become engines of economic development. Policymakers, he writes, “want universities to be more responsive to market forces, more entrepreneurial and more attuned to the needs of industry.”

Cook and Sand basically agree with the critics. “We have done very little in taking university innovations with commercial relevance and turning them into enterprises,” says Cook.

Sand says of the 150 or so patent applications coming yearly from UW-Madison, around four will prompt creation of a new company. “There is an enormous amount of intellectual property sitting on the shelf,” he says.

He admits that a lot of his fellow researchers aren’t interested in becoming entrepreneurs. “They didn’t come to the university to be a CEO,” Sand says. “That’s the biggest thing. They like where they’re at. They love what they do. It’s a giant pain in the butt to [start a company].”

That pain isn’t quite so acute these days.

At UW-Madison, the pressures to commercialize research prompted Chancellor Becky Blank’s Discovery to Product (or D2P) program, which has been mentoring Cook’s and Sand’s biotech baby. Dizzily varied in their ambitions, the other two dozen or so D2P mentees range from medical to industrial to virtual reality undertakings. Even the UW’s long-running Dictionary of American Regional English investigation, struggling to find a commercial application in the digital age, has participated.

As D2P’s director John Biondi describes it, the goal is to take the campus’ most marketable research, workshop it to refine its commercial appeal (called “de-risking” and finding “the value proposition” in tech-speak), arrive at a preliminary business plan, and — assuming a viable strategy is determined — nudge the founders to incorporate the business and produce results all within 18 months.

This is a challenging agenda for a venerable academic institution.

“There is still very definitely a distinct disdain for commercialization from a lot of people at the university,” Laura Strong, chief operating officer of Madison-based Quintessence Biosciences, told the Badger Startup Conference held on campus in August.

Strong, who has a doctorate in organic chemistry from UW-Madison and is a co-inventor on four patents, said the idea permeates campus “that research is somehow good and pure, and that development is all about money and greed.”

Rock Mackie, an acclaimed UW-Madison researcher/entrepreneur who helped found the medical imaging company TomoTherapy and the data analytics company HealthMyne, said the problem is with the entrepreneurial indifference of mid-level campus administrators. He and Strong were part of a high-powered panel addressing the question: “Can UW-Madison become a 21st-century entrepreneurial university?”

The chancellor’s office gets the importance of technology transfer, Mackie said. So did his faculty colleagues. (Mackie is an emeritus professor in the departments of human oncology, medical physics, biomedical engineering and engineering physics.) But the deans and department chairs didn’t see entrepreneurial activism as part of their charge and wouldn’t do so, he argued, until they were held accountable for the number of startups in their bailiwicks, the amount of investment they spurred, and the business-minded activities of their students.

“We will not have an entrepreneurial university,” Mackie said flatly, until the deans and chairs got with the program.

His comments echoed David Krakauer’s when he left the director’s post at the Wisconsin Institute for Discovery earlier this year. Krakauer told me that midlevel university administrators sometimes stymied his change-oriented agenda. “These are people who have been here for decades, who think they know how things should run, because that’s how they ran 10 years ago. They haven’t really absorbed what’s happening in the world.”

Kevin Conroy, the CEO of high-flying Exact Sciences, offered his own take on the UW problem at the Forward Festival tech gathering at Monona Terrace, which was held the day before the Badger Startup session. Ticking off his agenda for growing the state economy, Conroy, whose company is heading downtown if the Judge Doyle Square project comes to fruition, pointedly said the UW System and its patenting and licensing arm — the Wisconsin Alumni Research Foundation — need to be held accountable for their roles in job creation and business startups in Wisconsin.

Asked in a subsequent interview how the campus was doing on startups, Conroy said it didn’t appear to be a top priority, which he felt was perhaps understandable given its academic mission. But he added, “If the UW was perceived statewide as being an economic engine for this state, it probably would have been in a better position to handle the funding crisis in the last budget cycle.”

Some of his complaint is based on first-hand experience. Exact Sciences, whose breakthrough product is a noninvasive test for colorectal cancer, has turned to the Mayo Clinic in Minnesota and MD Anderson Cancer Center in Texas to research and test cancer-fighting tools.

“Historically, it has been challenging to do clinical trials with the UW Medical School,” Conroy says. “The process to make it through the clinical trial review board has typically taken a long time. Too long for companies operating at the speed of light.” Both Anderson and Mayo are easier to work with than UW, he says.

This is a touchy matter. Investors have pumped nearly $700 million into the Dane County biomedical company, which in 2014 secured federal approval — after extensive medical testing at Mayo Clinic — of a stool-based cancer test.

Conroy’s complaint about UW clinical testing drew a diplomatic reply from med school associate dean Marc Drezner. “We have good evidence that things are improving,” he says of the review process for clinical trials. “Are they perfect? No. Could they be better? Yes. Are we working to make them better? Absolutely.”

That said, Drezner notes that the UW’s goal isn’t to be the quickest medical institution in assessing proposed health trials, but “to be as good as we can be within the limits of assuring patient safety.”

“We’ve got cool stuff here at the university. We just have to continue to make companies out of it.”
— John Biondi, director Discovery to Product

John Biondi, the gray-haired D2P maestro, is unfazed by the hubbub surrounding the UW efforts. “Universities are huge bureaucratic, hierarchal institutions. That provides challenges. But you work around them,” he says matter of factly during an interview at D2P’s unglamorous but functional space in the old Luther’s Blues building, 1403 University Ave.

“This is a scientific Xanadu here,” he says of the campus faculty and their laboratories. “Universities have amazing resources and incredibly smart people. Our job is to minimize the negatives and work with the positives.

“The challenge is to get them to look at their technology through the mind of the customer and not just as a step to their next experiment,” he explains. “Cool technology without a market is just a cool toy. It has got to be something that somebody will write a check for.”

“Figuring that out sometimes is very hard,” he admits.

Biondi, 67, has the unflappable style of a startup veteran. He spent 15 years at the old Ohmeda Inc., the anesthetic device company now part of GE Healthcare Worldwide, before helping launch a series of science-heavy tech companies. (He also runs a cider-apple farm with his wife near Mineral Point.)

“I have no teaching mission,” he says of his D2P charge. “My job is strictly commercialization. It makes it easy to focus.”

For Biondi, D2P is just one more startup striving for success before the money runs out. D2P’s funding — for three years only — is split evenly at $1.6 million apiece by the university and WARF. The state delivered a critical “igniter” grant of $2.4 million to be split among the projects for their pre-startup costs. Individual grants have ranged from $50,000 to $200,000. D2P is just finishing up its second class of mentored projects. A third will commence in February 2016.

“We’re not looking for ideas,” he says of D2P’s projects. “We want innovations that are [already proven]. We work at what it takes to make these innovations commercial, what it takes to make them competitive.”

Of the first two classes of mentored projects, about a dozen and a half are deemed to show promise of becoming startups or have already launched. Standouts include hard-core biotech projects AIQ, StemPharm, BrainExell and BiopsyAssure, which, respectively, involve 3-D bone imaging, new cell culture tools, neuro stem cell discovery, and a prostate cancer test. Mobius, in contrast, is an app for smart phones that enables multiple numbers to be used from a single phone. The no-goes include the Dictionary of American Regional English. Efforts to license its one-of-a-kind content have yet to find any takers.

The D2P team — including life-science specialist Trevor Twose, IBM veteran David Ertl, lawyer/ MBA-holder Adam Sherman and veteran project manager Will Robus — follow a program known as the lean startup methodology. They offer business plan advice, staffing suggestions, market insights, financing contacts and general handholding. Not incidental to their work is the creative camaraderie that arises from aspiring entrepreneurs trading advice and sharing experiences.

The surprise is how people working on wildly different projects can still help one another.

I sat in on a check-in meeting of the second class this summer where the novice entrepreneurs gave status reports to the group. Todd Asmuth, whose med-tech project with Scott Reeder involves creating calibration devices (called phantoms) for medical imagery, suggested a Wisconsin manufacturing contact for two young engineers working on a novel industrial-adhesive mixing device. One of those engineers, in turn, prodded nature photographer Lisa Frank, who wants to translate her elaborately detailed photo mosaics into virtual reality content.

Eric Ronning asked Frank why she saw gamers as her target audience. Why not aim for the general public and emphasize the mental health benefits of her striking nature tableaus washing over the viewer in a 3-D environment? (Frank later told me she initially had the same idea, but through D2P coaching realized it was smarter to aim her virtual reality product at early tech adapters like gamers.)

“Oh, my gosh, people are really engaged and want to help out,” says Brian Pekron, Ronning’s fellow engineer and business partner.

“It seems like every time we meet the momentum builds,” Ronning adds. “Everybody contributes, so you get that cross-pollination of perspectives.”

Cook and Frank, who were part of the first class, share Ronning’s and Pekron’s upbeat enthusiasm for D2P. Cook has three other startups on his resume, including 10-year-old Isomark, which is developing a device that can detect life-threatening infections by analyzing a person’s breath. Because of their experience with D2P and an earlier WARF commercialization program, Cook feels AB E Discovery is much farther down the road to generating revenue than his other startups were at this point. He credits Sherman’s pricing advice and Twose on the technology end for “asking the right questions to make sure we didn’t make really dumb mistakes.”

Sand adds, “It doesn’t matter if you have great technology. What matters is who is going to buy it.”

That’s the challenge facing AB E Discovery.

In a nutshell, here’s the discovery that Cook and Sand want to commercialize to fight livestock disease. Instead of nuking, so to speak, harmful pathogens in the animal intestine with antibiotics (and possibly producing scary drug-resistant superbugs), the duo figured out how the microbes close down an animal’s resistance by manipulating a protein called Interleukin 10, which functions as an “off-switch” for the immune system.

Their breakthrough was finding the naturally created antibody that could block that shutdown. “We target the stand-down molecules and allow the immune system to do its job,” says Cook. He explains that antibodies are proteins we make when we get vaccinated. Mothers pass on countless antibodies to their babies by way of breast milk. Chickens do the same through their eggs. And it’s through laying hens that Cook and Sand produce the antibody for Interleukin 10. Those chicken eggs are dried and sprayed on animal feed. Field tests on chickens, cattle and sheep have proved successful in protecting them from major barnyard diseases, says Cook.

“In using this very natural system, we create for the first time a way to get rid of drugs and chemicals,” he says.

John Neis, a 30-year venture investor in Madison tech, is impressed.

“Mark [Cook] is one of the great innovators on campus,” he says. “He knows his markets really well, too. He’s stepping forward with this technology at a moment of tremendous opportunity, because at the end of the day antibiotic-free meat is something that consumers are demanding.”

The challenge is that supermarket meat suppliers are “a very concentrated universe of customers,” Neis says. “They are very cost conscious. It’s a market where pennies and fractions of pennies wind up being very important.”

Chris Salm, the startup’s CEO, makes the same point, explaining that the top 10 poultry producers control 70% of the market and raise — astonishingly — from 100 million to 2 billion chickens apiece each year. “They all have their processes down. If you tell them to change, they tell you to go away.”

But Salm has worked in the industry for 30 years and says he can talk to the one person — the CEO — who can make an operational change of this magnitude. “I can paint a picture of the future that the CEOs will like,” he says confidently.

Now that AB E Discovery has incorporated and entered the startup phase, it’s stepping away from the campus laboratories that birthed it. Cook, Sand and Salm funded the early operation out of their own pockets, along with the WARF grant. The campus licensing giant also helped the researchers secure six patents, which should put a moat around their intellectual property for years to come.

As for future plans, including the search for venture investors, lips began to seal as publication for this story approached. But it’s known that several large corporations are very interested in AB E Discovery. A major announcement may be a month or two away.

UW-Madison could use a big win on the startup front to hush the critics.

In an expansive moment, Biondi summed up the university’s challenge and its promise.

“We’ve got cool stuff here at the university. We just have to continue to make companies out of it,” he said. “You know, we’re learning. We don’t have it figured out yet, but we’re putting some stuff out that’s pretty damn cool. It’s not just another mobile app or a consumer doodad. It’s stuff that makes a difference for society.”